Retainage Calculator
Model retention on a contract the way AP actually has to track it: what has accrued on billings to date, what reduces at the completion milestone, and what remains to release at closeout.
Retainage is calculated by applying the contract withholding rate (typically 5–10%) to each progress billing, often reducing at a completion milestone such as 50%. The amount currently held equals retention accrued on billings to date minus any releases. AP teams should track retention as a separate payable balance per job and vendor, and gate release on completion verification and final unconditional lien waivers rather than treating it as a normal invoice payment.
Key Industry Data
- Federal construction contracts: retainage shall not exceed 10 percent: FAR 32.103
- Where states set limits, the prevailing range is 5–10%: ConsensusDocs (2025) (2025)
Retainage looks simple — withhold 5–10% of each billing — until the contract hits its reduction milestone, a partial release goes out, or someone asks how much retention payable is sitting on a job. This calculator models the standard structure: a base retainage rate up to a completion point (often 50%), a reduced rate afterwards, and any releases already made. Use it from either side: retention you hold on subcontractor billings, or retention an owner is holding on yours.
How It Works
Enter the contract value, base retainage rate, percent complete, the milestone where retainage reduces, the reduced rate, and any retainage already released. The calculator computes retention accrued on billings to date, the amount currently held, the projected total at completion, and what is still to accrue.
Input Your Data
Current contract amount including approved change orders
Rate withheld from each progress billing
Progress billed to date as a share of contract value
Completion point where the withholding rate drops (100 = no reduction)
Rate withheld on billings after the milestone (0 = no further withholding)
Any early or partial retention releases to date
Assumptions(fixed model rules)
Every constant behind this calculator is listed here. Adjust the editable values to match your organization, then recalculate — results always use the values shown below.
- No hidden constants: Every driver of this model is an input above. Retainage accrues at the base rate on billings up to the reduction milestone and at the reduced rate afterwards.
- Held balance: Currently held = retention accrued on billings to date − amounts already released. The projection applies the same tiered structure at 100% completion.
Results update using the current assumptions shown in the methodology below.
Your Results
Default scenario interpretation
A meaningful retention balance is building on this contract. Make sure your ledger separates retention from regular payables and that release requires final waivers and closeout documentation — this is where spreadsheet tracking starts to slip.
How to calculate retainage: worked example
Retainage withheld on a billing = amount billed × retainage rate. Retainage held = total withheld to date − total released. Example: an $850,000 subcontract with 10% retainage that drops to 5% after 50% completion, now 60% complete, with nothing released yet.
- Billed to date = $850,000 × 60% = $510,000.
- Billings up to the 50% milestone = $850,000 × 50% = $425,000, withheld at 10% = $42,500.
- Billings after the milestone = $510,000 − $425,000 = $85,000, withheld at 5% = $4,250.
- Retainage held = $42,500 + $4,250 − $0 released = $46,750 (9.2% of billings to date).
- Projected total at completion = $42,500 + ($425,000 × 5%) = $42,500 + $21,250 = $63,750.
- Still to accrue = $63,750 − $46,750 = $17,000.
Net paid to date on this subcontract = $510,000 − $46,750 = $463,250. The $46,750 sits in retainage payable until release.
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How We Calculate
Billings to date = contract × % complete. Up to the reduction milestone, retainage accrues at the base rate; billings beyond the milestone accrue at the reduced rate. Currently held = accrued − already released. Projected total applies the same tiered structure at 100% completion.
Track retention automatically on every subcontractor invoice
Aequo Build withholds retainage at the subcontract rate when each subcontractor invoice is approved, pays the net amount, and tracks held, released, and remaining retainage by job and vendor, with partial or full releases that need approval and can be reversed with a reason.
Frequently Asked Questions
How do you calculate retainage?
Multiply the amount billed (work completed, plus stored materials if the contract allows) by the retainage rate. On a $50,000 progress billing with 10% retainage, $5,000 is withheld and $45,000 is paid. The retainage balance is the total withheld to date minus anything already released.
How is retainage calculated on a progress billing?
Multiply the billing amount by the contract retainage rate. On an AIA G702/G703 application, retainage is calculated on completed work and stored materials, shown as a deduction before the payment due. If the contract reduces retainage after a milestone (commonly 50% completion), later billings are withheld at the reduced rate while earlier retention stays held until release.
When is retainage released?
Typically at substantial completion or final acceptance, subject to the contract and applicable state rules. Well-run AP teams treat release as a documented event: completion verified, final unconditional lien waivers collected, punch list closed, and the release posted against the retention balance. Some contracts allow earlier partial releases at defined milestones.
How should retainage appear in the accounting system?
Separately from regular payables. On the payable side, withheld amounts sit in a retention payable account by job and vendor rather than in ordinary AP aging; on the receivable side, retention receivable is tracked by contract. QuickBooks does not manage this tiering natively, which is why most contractors track retention in job-cost software or a controlled register.
What is a typical retainage rate?
Five to ten percent of each progress billing is the common range in US construction, sometimes reducing at 50% completion. On federal construction contracts retainage may not exceed 10% (FAR 32.103), and many states cap rates or set release deadlines — see our retainage laws by state table and always defer to the contract and the governing state rules.
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